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Schroder Absolute Return Income Fund

The Schroder Absolute Return Income Fund* is an absolute return focused strategy that has the flexibility to invest across the broad fixed income universe. It seeks to deliver regular income via a diversified set of return sources, targets low levels of capital volatility with a focus on minimising drawdowns, and maintains a low sensitivity to interest rates.

*(formerly known as Schroder Credit Securities Fund)

Investment objective

To outperform the RBA Cash Rate by 2.5% p.a. before fees over the medium term.

Benefits

Key Risks

Market risk: includes the risk of volatility and negative returns arising from investment markets.

Interest rate/duration risk: The performance of fixed interest and debt securities will be sensitive to movements in domestic and international interest rates (e.g. increases in interest rates result in the capital value of fixed interest investments falling).

Credit risk: Credit risk arises when an issuing entity defaults, which results in a loss of capital to the Fund.

Company risk: includes the risk of adverse changes to a company or its business environment.

^Subject to change. Refer to the Buy/Sell spreads page in the Fund Centre

How the Fund is managed

Adopting an absolute return approach, the most critical element of the investment process is to identify which assets to own and when to own them. This is determined through our valuation driven return/risk framework, underpinned by a focus on downside risk.

Unconstrained by design, the Fund can diversify its exposures across geography, issuer type, maturity, ratings grade and capital structure dimensions, with allocations to these dimensions supplemented by duration management and alpha strategies. Risk management is crucial to control the Fund’s exposure to the aggregation of portfolio risks, in particular to limit correlation to equity markets and to minimise volatility and drawdowns.

This approach is complemented by extensive fundamental research by local and global analysts, as well as insights from Schroders’ extensive fixed income capability. The targeted result is a well-diversified portfolio of bonds and other debt securities with the potential to deliver consistent returns above cash and term deposits, with high liquidity but with much lower risk than the equity market.

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